World Bank slashes 2016 global growth forecast to 2.4%

The World Bank has revised its global growth forecast for this year to 2.4 percent from an earlier projection of 2.9 percent, citing sluggish demand in advanced economies, low commodity prices, weak trade and reduced capital flows.

Commodity-exporting emerging market nations have struggled to adapt to lower commodity prices, accounting for half of the downward revision, Reuters cited the bank as saying in a new report.

The World Bank now expects these economies to grow at a meager 0.4 percent pace this year, a downward revision of 1.2 percentage points from a previous projection made in January.

Commodity-importing emerging market countries are faring better, but the benefits of lower energy and other goods have been slow to materialize, the bank said in its latest Global Economic Prospects report.

It now expects growth in these countries will reach 5.8 percent, down a tenth of a percentage point from the January forecast.

“As advanced economies struggle to gain traction, most economies in South and East Asia are growing solidly, as are commodity-importing emerging economies around the world,” World Bank Chief Economist Kaushik Basu was quoted as saying in a statement.

However, he cautioned that the rapid rise of private debt in several emerging and developing economies posed a risk to growth should non-performing bank loans rise.

Among major emerging market economies, the World Bank kept China’s growth forecast unchanged at 6.7 percent this year after 2015 growth of 6.9 percent.

India’s growth is expected to hold steady at 7.6 percent this year, while Brazil and Russia are projected to remain in deeper recessions than forecast in January.

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